A Study on the transition of State from Laissez Faire to Social Welfare


The relationship between the welfare state and globalisation is intricate and dynamic. Today’s “welfare state” connects and spans a wide range of policy areas, and some of these areas are likely to be more negatively impacted by globalisation than others. “The welfare state has always been evaluated by its good intentions, rather than its disastrous results,” Thomas Sowell once stated.

According to Aristotle, a state is “a body of citizens adequate for the ends of life.” “A modern state is a system of administration and law which is adapted by state and law and which guides the collective actions of the executive staff,” writes Max Weber. “The executive is similarly regulated by statute and makes a claim power over members of the association (those who necessarily belong to the association by birth) but inside a broader scope over all actively taking place in the territory over which it exercises dominance.”

Protecting and advancing the social and economic welfare of the populace is the goal of a contemporary welfare state. A government’s responsibility to uphold the ideals of equality of opportunity, fairness in the allocation of wealth, etc., is regarded as one of its most crucial functions.

History and Evolution

A shift in thinking about the purpose and role of the state is to be blamed for the expansion of Administrative Law. The individualism, individual entrepreneurship, and self-help philosophies all reflected laissez faire, which was the dominant political truth of the nineteenth century. This concept promoted maximum free entrepreneurship, little government regulation, and contractual freedom.

The state was referred to as the “law and order” state, and its role was perceived as negative because its interests were limited to a small number of activities, such as defending the nation from external aggression, upholding internal law and order, administering justice to its citizens, and collecting a small amount of taxes to support these activities. It was a time of free enterprise and minimal governmental involvement. The administration of social and economic life was not seen as a government function.

But the laissez-faire philosophy led to human suffering. It was understood that no one in society had an equal negotiating position, and unchecked contractual freedom led to the exploitation of the weaker by the stronger, such as the exploitation of workers by management in industries.

Slums, unsafe and unpleasant working conditions, child labour, widespread poverty, and mass exploitation occurred on the one hand, but on the other, the concentration of wealth in a small number of hands became the norm. The need for the state to actively improve the living conditions of the poor became clear. This strategy led to the death of laissez-faire and the birth of the new political doctrine known as “collectivism,” which supported government interference in private sector as well as social control and regulation.

The state began to take action for social justice; it took on a “positive” role. The idea of the “social welfare state,” which emphasises the role of the state as a vehicle of socio-economic regeneration and the welfare of the people, developed over time out of the collectivist ideological system.

A strong illustration of this trend can be provided by mentioning the situation in India. British India was a police state prior to 1947. The dominant foreign power’s main objective was to increase its own dominance; as a result, the administrative apparatus was predominantly deployed with that goal in mind, and the civil service came to be known as the “steel frame.” The welfare of the populace was not a major concern for the state. But after the country gained its independence in 1947, this situation changed. Then, a deliberate effort was made to turn the nation into a welfare state.

The Indian Constitution explicitly incorporates the welfare state ideology. In order to guarantee social, economic, and political justice to all of its residents, among other things, the Constitution strives to establish a sovereign socialist secular democratic republic in India, according to the preamble. The state is required to further the welfare of the people in accordance with Art. 38 of the Directive Principles of State Policy by establishing and defending a social order in which social, economic, and political fairness must underlie all institutions of national life. The state must focus its policies on ensuring that all citizens have an equal right to an adequate standard of living, that ownership and control of the community’s material resources are distributed in a way that best serves the common good, that there is no concentration of wealth and production resources that would harm the general welfare, and that equal pay is given for equal work.

The state is required to fund education as well as help for the elderly, the unemployed, and other situations. Children up to the age of fourteen must get free and required education, which is the responsibility of the state. Furthermore, even though some of these ideas may not be specifically enshrined in the Constitution, the judiciary occasionally considers them while interpreting the law and the Constitution.

The concept of social welfare as it emerged has had a tremendous impact on all democracies. The result has been state activism. In the 20th century, there has been a phenomenal expansion of state activity; the state now performs a lot of tasks that were formerly performed by private sector. Today, the state is involved in every aspect of daily life. It manages the bus, rail, and postal systems; plans the social and economic life of the community in order to improve the living conditions of the less fortunate and lessen wealth concentration; renovates slums; plans urban and rural life; cares for citizens’ health, morals, and education; and produces electricity, works mines, and manages key and significant industries.

It actively participates in socioeconomic policy, greatly restricts personal freedom and life choices, offers a wealth of advantages to its residents, and imposes social control and regulation on for-profit businesses.

Transition of the doctrine of Laissez faire to welfare state with special reference to India

The ideals of liberalism, socialism, and conservatism gave rise to the idea of the welfare state in the historical context of Britain. Empiricism and ideology were interestingly applied to the issue of poverty during the concept’s formative years. Within a liberal framework, the welfare state involved a social consensus on a broad range of socioeconomic issues. The concept’s expansion was significantly influenced by two sociological factors: first, rising prosperity, which led to an upsurge in expectations; and second, the optimism and anxiety sparked by the recently gained manhood franchise. The pattern for increasing municipal action and the interest of the government in social reform was set by the faith in piecemeal social engineering, free of dogma. In fact, this was a foreboding start.

In this case, the two main topics of the “principled” discussion on the welfare state were governmental assistance and self-help. As a logical framework, Herbert Spencer’s liberalism—the pinnacle of self-help—had deeper implications for welfare state operations. It is untrue to say that Spencer was against the welfare state. Although his ideology of non-intervention and positivism appears to be at odds with laissez-faire, it is in line with the idea that government assistance should be used in addition to self-help.

The idea of laissez-faire refers to an environment where private parties can deal without interference from the government, including burdensome rules, taxes, tariffs, and imposed monopolies. Let it be is the literal translation of this French expression. While implementing the welfare state model, the British political system has developed a remarkable ability to defend a liberal identity against the concepts of French and German socialism. The level of British opposition to utopian aspirations and adaptation to new responsibilities and circumstances was astounding. Political leaders of all hues and complexions were changing their beliefs in response to democratic demands. They were giving up their stances on issues affecting the working class and the poor in reaction to pragmatism. A sizable portion of the economy, including transportation, finance, agriculture, industry, and trade, was governed by regulations.

Numerous court decisions in India have clarified the idea of laissez faire. The court stated in Vishnu Agencies v. Tax Officer that the French phrase “Laissez faire” dates back to the 18th century. It conveys the desire of the business community for the government to refrain from interfering. In Bombay Telephone Canteen Employees’ Association v. Union of India, it was determined that article 14 of the Constitution, which guarantees to every individual, just, fair, and reasonable method before terminating an employee’s services, has delivered the laissez-faire principle a fatal blow. “The doctrine of laissez faire has been eroded by the judicial decision and the legislation, particularly in its application to persons in public employment to whom the constitutional protection of Article 14 and Article 311 is available,” the court stated in Government Branch Press v. D.B. Belliawpa. The political theory that the greatest economic and social good is the greatest number necessitates greater government intervention is what leads to the emergence of a welfare state. The Supreme Court stated in Modern Dental College and Research Center v. State of Madhya Pradesh that this country’s economic policy has evolved from laissez-faire to a welfare state to a liberalised economy.

The liberalisation, privatisation, and globalisation of the Indian economy led to significant changes in economic policy. Salus populi est suprema lex is Latin for “people’s pleasure is the highest law.” The greater public interest must be served by a welfare state. It refers to a kind of government in which the state actively safeguards and advances the economic and social well-being of its people. The state’s ability to serve as a guardian for persons who are unable to care for themselves is referred to as the parens patriae doctrine.

Literally translated as “parent of the country,” Parens Patriae The common law idea of the royal prerogative served as the foundation for the theory in England. In his capacity as Parens Patriae, the Sovereign served as “the general guardian of all new-borns, idiots, and lunatics.” Before granting the sovereign Parens Patriae representation, English law stipulated the following four conditions: the party is legally unable to assert his rights; the sovereign or his representative is the only option; the sovereign has a duty to safeguard the subject’s welfare; and the sovereign has no personal interest and acts on behalf of someone else.

Parens Patriae is now a weapon used by nations to safeguard the welfare of their citizens in cases when no individual citizen has a legal claim and may thus take legal action to address the issue. For example, Methyl isocyanate gas leaked from a pesticide factory owned by Union Carbide India, Ltd. during the evening of December 2, 1984. In the Indian city of Bhopal, the lethal gas spread, killing over 1,700 people and injuring 200,000 more. Five days after the catastrophe, on December 7, 1984, they filed the first of 145 lawsuits in the United States against Union Carbide Corp., the country’s parent company of Union Carbide India, Ltd., on behalf of Indian nationals. India’s lawsuit was founded on the common law principle of Parens Patriae, which permits a state to file a lawsuit to defend the rights of its population in the absence of any individual plaintiffs. The Parens Patriae issue, however, was not addressed by the district court, which dismissed the case. The court dismissed the complaint on the grounds of forum non conveniens because it believed India to be a more suitable and convenient location to hear the lawsuit.

One example of Parens Patriae in contemporary juvenile court is when custody is temporarily taken away from the parents and the children are placed in the care of social services until it can be determined what is in the child’s best interest, but the child is still allowed supervised visitation with the parents so the courts can determine what is true and what are unfounded allegations. Another illustration is when the State terminates the parental rights of a parent due to well-founded charges of abuse or neglect, and the kid or children are either placed in a foster care until they can be permanently adopted or are permanently placed with a relative who they know and trust.

“It needs to be kept in mind that theoretically and legally, the idea of parens patriae is not restricted to representation of some of the victims beyond the territory of the country,” the court ruled in Charanlal Sahu v. Union of India. It is accurate to say that the doctrine has so far been applied in America. In our opinion, the learned Attorney General was correct to argue that when citizens of a country suffer tragic consequences as a result of any multinational’s negligence, a peculiar situation arises that necessitates the use of appropriate effective machinery to articulate and carry out the victims’ complaints and demands, for which the traditional adversary system would be wholly insufficient. The State must step up to fulfil its sovereign responsibilities. The Indian state is required by its constitutional obligation to assume responsibility for the victims’ claims and to provide for them in their time of need.

The welfare state notion, which represents a consensus on a broad range of socioeconomic policies, was based on the interaction of empiricism and ideology, including conservative, liberal, and socialist views. The change had stood out in a number of ways. It happened in a free society where men projected their thoughts and interests into the realm of conflict and where governments tended to make choices after deliberating and conducting empirical research on issues. The specific circumstances of a developing economy, a laissez-faire mentality, and traditions of enlightened self-interest led to the evolution of the welfare state.

The Directive Principles of state policy were added by the architects of our Constitution in an effort to create a welfare state. But because they are not categorised as justiciable like the fundamental rights, these directives’ guiding principles are not appropriately applied. When drafting or changing laws, it is crucial for the nation’s legislators to keep the directive principles in mind. The Part IV of the Indian Constitution has these guiding ideas. It is claimed that these concepts have social, economic, and welfare characteristics. We attempted to establish a welfare state by implementing “directive principles of state policy” in part IV of the constitution. India has made a lot of attempts to put the Directive Principles into practise. Every youngster up to the age of 14 would receive free basic education under the five-year plans. The 86th Amendment included Article 21A, which aimed to make schooling mandatory for all kids between the ages of 6 and 14. For the development and welfare of the weaker segments of society, numerous welfare programmes are put into place. The Indian government passed the Prevention of Atrocities Act in 1995 to safeguard the scheduled castes and scheduled tribes. A number of land reform laws were passed to protect the impoverished farmers’ ownership rights. Similar to this, numerous other actions were created with the intention of improving society.

Increase of Functions of the Modern State

A modern state’s duties can be broadly divided into five categories: protector, provider, entrepreneur, regulator, and arbiter.

  • The state defends the nation against both external attack and internal chaos in its capacity as protector.
  • The state serves as a provider by offering social security, social welfare, and a minimal quality of living to everyone.
  • The state governs and regulates a variety of community activities in its capacity as regulator. This category includes environmental management, economic activity regulation, and urban and town planning.
  • The state engages in public industry as an entrepreneur.
  • The state mediates between conflicting social interests in society by acting as an arbitrator.

The community’s many economic and social groupings must coexist in acceptable harmony, with the state upholding a minimal standard of fairness. By regulating the employer-employee relationship and using other strategies, the state plays a significant role in promoting the socioeconomic welfare of labour. In addition, the state is making increasing efforts to provide social services, such as those related to family welfare, housing, health, and education. One outcome was inescapable as a result of this governmental activism. The state has increasingly taken on greater responsibilities for social control in its efforts to enhance the physical, moral, and economic well-being of the populace.

The legislature must pass ever-new laws to implement ever-new socio-economic schemes, and the courts must interpret these laws and resolve an increasing number of legal issues that these laws have caused. This increase in state activity has resulted in additional work for all of the state’s organs.

Our time has evolved into an administrative one, with administrative institutions predominating. The Administration has been granted broad authority to grant, reject, or revoke licences, impose penalties, and take various actions based on its subjective satisfaction or discretion. The Administration has been granted extensive powers of inquiry, inspection, investigation, search and seizure, and supervision in order to enable it to properly carry out its rule-making, adjudication, and other discretionary and regulatory tasks.

Departments, directorates, boards, commissions, authorities, bureaus, officers, tribunals, public businesses, government companies, etc. are some examples of the administrative organs. The fact is that the administration now has a tremendous amount of power and is able to carry out duties that are diverse and multifarious in their extent, nature, and ambit.

Is rule of law institutionalized in the welfare states?

Nobody would argue that the welfare system is free from the fundamental concepts of executive accountability associated with the rule of law, including loyalty to constitutional and legislative authority, consistency in administrative decision-making, and transparency. In addition, judicial review of administrative action is a well-established method of presumed rule-of-law enforcement in contemporary democracies. On the other hand, the rule of law continues to serve as a judicial safeguard for individual privacy rights against state intrusion. A strong “right/privilege” dichotomy that denies welfare rights more than the bare minimum in legal protection has been rejected. However, many people still have doubts about the viability of coherently elaborating executive accountability standards in the context of social programmes. These ideas were historically formed in relation with private rights. Furthermore, there is disagreement on how to institutionalise rule-of-law norms in the welfare state among those who support them.

The paradoxes in these concerns include:

Rules versus Standards

Lawyers are drawn to laws that limit administrative discretion because it encourages consistent decision-making. However, the way a rule is applied might occasionally be arbitrary in light of the pertinent objectives. In order to promote personalised analysis of how aims can be upheld in the context of the specific claimant, lawyers frequently adhere to certain norms. The early 20th century saw the emergence of the contemporary welfare state in America, influenced by a philosophy that favoured using discretion to tailor programming responses to the beneficiary’s specific needs. The objective was determination by highly qualified professionals under criteria in juvenile courts, education, child protection, and public aid. Against this viewpoint, there was a backlash in the 1960s and 1970s.

The performance of the on-the-ground bureaucrats and therapists who operated welfare organisations was harshly criticised by both the right and the left. They were thought to be arbitrary, obtrusive, and overbearing. This return to norms, discretion, and individuation results from a perception that rule-based governance is unable to address the ambiguity and diversity of beneficiaries’ circumstances. This discontent may be seen as a brief phase in a continuous oscillation between categorical and contextual rules.

However, according to another perspective, the trend is more fundamental and secular. The Irish National Economic and Social Development Office examines trends in Europe and identifies individuation, or what it terms “tailored universalism,” as a central feature of an emerging “developmental welfare state.” Its examination focuses on how recent social and economic upheaval has upended the fundamental assumptions of the welfare systems in Europe and the United States. 20 Immigration and increased geographic mobility have increased the diversity of the populations covered by social services. The elderly and women who were once the primary beneficiaries of traditional welfare programmes have been increasingly pushed and pulled into the labour force, necessitating a redesign of the programmes created specifically for them. The less trained parts of the workforce are now more vulnerable as a result of economic development, necessitating transitional public assistance that mixes income transfers and training.

Discrete v. Systemic Judicial Intervention

By arguing that “polycentric” claims were often unsuitable for judicial intervention, Lon L. Fuller cast doubt on the place of courts in the welfare system. A judicial order with regard to one component might have consequences for other components that might be unanticipated or controllable, which is where polycentric difficulties originate in intricately integrated systems.

In Goldberg v. Kelly, Justice Black stated in his dissenting opinion that assistance programmes would certainly respond by making it harder to first prove eligibility if courts ordered them to provide pre-termination hearings. The process became much more difficult as a result of the increasing verification requirements. When a judge ordered the special education programme in New York to better handle eligibility determinations, staff members were diverted away from serving current beneficiaries, and their level of service decreased. Systemic intervention is necessary to address polycentricity, but this entails another issue. The courts give up trying to establish and enforce clear rules for how a whole system should behave. The likelihood of unexpected or unwanted side effects from the court enforcing a legal mandate increases the narrower and more specific the mandate is. Comprehensive intervention, however, is challenging to firmly establish in the law.

Negative v. Positive Rights

In the case of DeShaney v. Winnebago Department of Social Services, the seminal case that established the importance of negative rights in American constitutional law, was a case involving child abuse and neglect. The plaintiff was a young boy whose father often abused him, resulting in significant brain damage. The state social services agency had interfered only ineffectively and failed to remove the boy from the household despite being aware for a long time of the danger he was in. According to the complaint, the state had violated the 14th amendment by depriving the complainant of “life, liberty, and property” (and hence actionable under section 1983). In a decision written by Justice Rehnquist, the court rejected the argument, concluding that “the Due Process Clauses generally confer no affirmative right to governmental aid [against lawless private action], even where such aid may be necessary to secure life, liberty, or property interests of which the government itself may not deprive the individual” The aforementioned ruling will not satisfy those who believe that the constitutional theory must be a firmly established norm because it only discusses history and convention. The division between negative and positive does not closely follow any tenable indicator of how important a citizen’s interests are in relation to one another.

DeShaney does, however, make a brief mention of a pertinent issue in its concluding paragraph: “In defence of [the defendants], it must also be said that had they moved too quickly to remove the son’s father from custody, they would likely have been met with charges of improperly intruding into the parent-child relationship, charges based on the same Due Process Clause that forms the basis for the present charge of failing to provide adequate protection.” Here, Rehnquist reiterates the tenet that positive right principles are ill-defined. Theorists claim that unlike the social norms that provide judicial decisions about private rights coherence, government programmes are not supported by a corpus of evolving but definite social standards. Welfare systems must be guided by bureaucracies under political control because they lack the self-adjusting characteristics of private markets. As a result, judicial action along traditional lines of the rule of law undermines political responsibility and raises the possibility of rigidity, arbitrariness, or both. If the indeterminacy claim is accurate, it suggests a catastrophic trade-off. Either we must exclude some of the most fundamental and significant interests of a large portion of the population from the strongest rule-of-law protection, or we must give the courts the authority or responsibility of defining and enforcing standards that are not amenable to coherent judicial elaboration.


It is increasingly difficult to define the term “Administration” or to develop a universal standard to identify an administrative entity due to the broad, spreading, and varied nature that administration has taken on. Saying that an administrative body administers is insufficient since administration involves much more than just enforcing the law; it also involves legislating and making decisions. When attempting to describe administration negatively, it is sometimes stated that it is in charge of everything that neither the legislative nor the courts are responsible for. It is crucial to keep in mind that governments must create new laws or alter old ones in order to keep pace with the needs of the evolving society. Examples of such laws include labour laws, tax laws, social security laws, and others. It is implied that a nation’s government must care about its citizens and the predominant cultures present in that country while also keeping in mind the rest of the globe while enacting such laws.





Author: Arryan Mohanty,
Symbiosis Law School, Nagpur/Student

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